The project represents the first foray by the government's International Petroleum Investment Company into liquefied natural gas.
Work begins on Papua gas project
Construction has begun on a major gas export project in Papua New Guinea that is partially owned by Abu Dhabi Government, a partner firm announced yesterday. The project represents the first foray by the government's International Petroleum Investment Company (IPIC) into liquefied natural gas (LNG), a form of gas chilled for transport on tankers that is expected to grow in importance as an energy source for East Asia after the global economy recovers. The consortium of firms behind the LNG project have agreed to invest US$600 million (Dh2.2 billion) to build up roads and infrastructure before their expected approval of a final investment decision later this year, according to Oil Search, an Australian firm that is partially owned by IPIC. "The decision to proceed with early works ... is a major vote of confidence in the PNG LNG project," the company's managing director, Peter Botten, said in a statement to the Australian Securities Exchange. Oil Search, which is developing the project in partnership with ExxonMobil and several smaller firms, has estimated it will cost between $11 to $12.5 billion, including development of gasfields, pipelines, and the liquefaction plant. Oil Search will need to come up with approximately $4.8 billion, of which a little more than $1 billion will come from IPIC's 17.6 per cent equity stake. Most of the rest of the cost will be borne by ExxonMobil, which owns 41.5 per cent of the project and is co-ordinating financing. Company officials said last month they expect the LNG plant to begin shipments by the end of 2013, and to eventually produce 6.3 million tonnes of LNG per year. Front-end engineering and design on the project is scheduled to be completed by the end of the third quarter, at about the same time the consortium of firms receives bids from energy contractors. Oil Search also said it had made "significant progress" on marketing the expected level of LNG output. Late last month, officials at Sinopec, the Chinese oil company, revealed they were in talks to buy 2 million tonnes of LNG from the project annually. email@example.com